Gold slumped by over 1 percent on Wednesday as FOMC-inspired gains for the greenback dragged the precious metals lower. A focus on improvements in the US labor market and less concern over disinflation risks in the committee’s statement likely reinvigorated the US Dollar bulls.
Looking ahead, US Third Quarter GDP figures are tipped to reveal a healthy annualized 3 percent rise. Robust US data may reinforce the prospect of the Fed moving further towards policy normalization. This in turn could offer further fuel to the greenback and place further pressure on gold and silver.
Turning to the energy commodities; crude oil benchmarks witnessed modest gains in recent trading with newswires citing a positive set of US Inventories figures as a potential catalyst. However, the latest DOE data also revealed a climb in crude production to a fresh multi-decade high. This suggests oil’s recent climb may simply reflect trader repositioning near a critical technical barrier, rather than bullish fundamental cues. While supply glut concerns continue to linger the scope for a recovery for crude may be limited.
Meanwhile, natural gas pricesposted a solid gain of over 3 percent on Wednesday with media sources reporting a forecast shift to colder US weather conditions over the next week. Storage injection data due over the session ahead may set the energy commodity up for further volatility. Recent readings have printed substantially higher than the seasonal average, which has bolstered expectations over ample supplies heading into the US winter. Another above average print could keep these concerns alive and suppress further gains for prices.
Finally, copper has stabilized in recent trade with fresh reports on the Indonesian copper miner’s strike lacking. The story deserves to be monitored for fresh developments that could bolster speculation of production crimps. These could offer a short-term influence on prices, however the lasting impact of such events is often limited.
